Becnel v. Lamorak Insurance Company

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

JAMES BECNEL ET AL. CIVIL ACTION

VERSUS NO. 19-14536

LAMORAK INSURANCE COMPANY ET AL. SECTION “B”(5)

ORDER AND REASONS

Before the Court are defendant Lamorak Insurance Co.’s motion

to enforce stay, Rec. Docs. 129, 132, 140-3, and plaintiffs

Jacqueline Dugas Becnel, Sheila Becnel Eschete, and James Paul

Becnel, Jr.’s opposition and unopposed motion for expedited

hearing. Rec. Docs. 132, 134.

For the reasons discussed below,

IT IS ORDERED that the motion to enforce stay is GRANTED in

all aspects, staying this matter until September 21, 2021 subject

to modification. The motion for expedited hearing is DISMISSED AS

MOOT.

I. FACTS AND PROCEDURAL HISTORY

This case arises from an asbestos-exposure negligence claim,

first filed in Louisiana state court by James Becnel. Rec. Doc. 1-

2 at 4. Mr. Becnel allegedly contracted “asbestos-related cancer

and/or lung cancer” as a result of direct exposure to asbestos

while working at Avondale Shipyard in 1965. Id. at 3. Defendants

Huntington Ingalls Inc. and Lamorak Insurance Co.1 (the “Avondale

Interests”) removed the case to this court following Mr. Becnel’s

death when his heirs substituted themselves as party plaintiffs

and asserted survival and wrongful death claims, and alleged strict

liability allegations against the Avondale Interests. Rec. Doc. 1

at 5. Plaintiffs filed a motion to remand, Rec. Doc. 7, but this

court denied the motion. Rec. Doc. 53.

Since then, Lamorak has been declared insolvent and placed

into liquidation. Rec. Doc. 129-2 at 1. Subsequently, the

Commonwealth Court of Pennsylvania permanently stayed all claims

against Lamorak. Rec. Doc. 129-3. Now Lamorak asks this court to

enforce the Commonwealth Court of Pennsylvania’s stay and the

automatic statutory stay of claims against it and “any party it is

obligated to defend” under Louisiana Revised Statute § 22:2068(A)2.

Rec. Doc. 129-2. Defendants Navistar, Inc. and Huntington Ingalls,

Inc. joined in and adopted Lamorak’s motion to stay proceedings.

Rec. Doc. 142. Plaintiffs filed an opposition and an unopposed

motion for expedited hearing on defendants’ motion to enforce stay.

See Rec. Docs. 132, 134.

1 Lamorak Insurance Co. was sued as the alleged insurer of various executive

officers of Avondale. Rec. Doc. 1 at 2, n.1.

2 “All proceedings in which the insolvent insurer is a party or is obligated

to defend a party in any court in this state shall be stayed for six months

and such additional time as may be determined by the court from the date the

insolvency is determined to permit proper defense by the association of all

pending causes of action.” LA. REV. STAT. ANN. § 22:2068(A).

On May 19, 2021, Judge Nannette Jolivette Brown granted

Lamorak’s motion to stay, which had also been joined by Huntington

Ingalls, Inc. and Albert L. Bossier, Jr. in Gooding v. Liberty

Mutual Insurance Company, No. 20-1133, 2021 WL 2002463, at *1 (E.D.

La. May 19, 2021). Rec. Doc. 141-1. Then on May 20, 2021, Judge

Sarah Vance granted a similar motion in Cortez v. Lamorak Insurance

Co., No. 20-2389, 2021 WL 2018073, at *1 (E.D. La. May 20, 2021).

Rec. Doc. 141-2. On May 25, 2021, Judge Mary Ann Vial Lemmon

granted a stay of all claims in Broussard v. Huntington Ingalls,

Inc., No. 20-836 (E.D. La. May 25, 2021).

II. LAW AND ANALYSIS

Plaintiffs do not ask this court to lift the stay against

Lamorak, Rec. Doc. 132 at 5, so the only contested issue before

the court is whether plaintiffs should be allowed to proceed

against the policyholders and other defendants in this litigation.

Under the “Burford doctrine,” a federal court may decline to

adjudicate—and can dismiss—cases that are otherwise within its

jurisdiction if the exercise of federal review over the question

in a case would disrupt state efforts to establish coherent policy

with respect to matter of substantial public concern. See Burford

v. Sun Oil Co., 319 U.S. 315 (1943); New Orleans Pub. Serv., Inc.

v. Council of City of New Orleans, 491 U.S. 350, 361 (1989). Fifth

Circuit precedent holds that a stay of action pending the

resolution of a state court liquidation proceeding is appropriate

under Burford. Barnhardt Marine Ins., Inc. v. New England

International Surety of America, Inc., 961 F.2d 529, 531 (5th Cir.

1992). States have primary responsibility for regulating the

insurance industry and Louisiana’s insurances laws provide a

comprehensive framework for the liquidation of insolvent insurance

companies and the resolution of claims against them. See 15

U.S.C.A. § 1011 (declaration of Congressional policy for the

McCarran-Ferguson Act); see also LA. STAT. ANN. §§ 22:731, 22:2051-

2068 (2020) (the Louisiana Insurance Guaranty Association Law).

Section 2068(A) provides:

All proceedings in which the insolvent insurer is a party or

is obligated to defend a party in any court in this state

shall be stayed for six months and such additional time as

may be determined by the court from the date the insolvency

is determined to permit proper defense by the association of

all pending causes of action.

LA. STAT. ANN. § 22:2068 (2020). Plaintiffs argue that this court

should ignore the express and explicit terms of the statutory stay

because the statute is procedural rather than substantive and the

Becnel trial falls outside of the six months stay contemplated by

the statute as was the case in Jones. Rec. Doc. 132 at 3; see Jones

v. Hoel, 211 F.Supp. 2d 823 (E.D. Tex. 2002). But plaintiffs’

arguments are unpersuasive. The court in Jones relied on the

language of the Texas statute to determine if it was enacted as a

means to enjoin federal courts from acting; Texas Insurance Article

21.28-C §17 provides, in part:

All proceedings in which an impaired insurer is a party or is

obligated to defend a party in any court in this state, except

proceedings directly related to receivership or instituted by

the receiver, shall be stayed for six months and any

additional time thereafter as may be determined by the court

from the date of the designation of impairment or an ancillary

proceeding is instituted by the state, whichever is later, to

permit proper defense by the receiver or association of all

pending causes of actions. A deadline imposed under the Texas

Rules of Civil Procedure or the Texas Rules of Appellate

Procedure is tolled during the state.

TEX. INS. CODE. ANN. art. 21.28-C §17 (2003)3. Although the court was

“unable to conclude with certainty” whether the § 17 stay applied

to federal courts, it concluded that the Texas Legislature

contemplated the effect that the stay would have on plaintiffs

pursing actions in Texas state courts and provided them with relief

from deadlines in the Texas Rules, but no such relief was

contemplated for plaintiffs pursuing cases in federal courts.

Jones, 211 F.Supp. 2d at 826 (“[T]he statute goes on to provide

that, ‘[a] deadline imposed under the Texas Rules of Civil

Procedure or the Texas Rules of Appellate Procedure is tolled

during the stay.’”). Here, the Louisiana statute does not

reference any state procedural rules and refers to all proceedings

“in any court in this state.” The Jones court would agree that

language signifies the legislature intended to bind federal courts

as well as state courts. Jones, 211 F.Supp. 2d at 826. (“Because

the Texas legislature could have chosen to specifically articulate

3 N.b. Texas’s Property and Casualty Insurance Guaranty Act has since been

repealed by Acts 2005, 79th Leg., ch. 727, § 18(a)(6), eff. April 1, 2007.

that the stay was applicable only to Texas state courts and chose

not to, the Court is left with the impression that the statute

applies to any court physically located in the state, which would

include federal courts.”).

Moreover, “[a] district court has inherent power ‘to control

the disposition of the causes on its docket with economy of time

and effort for itself, for counsel, and for litigants.’” United

States v. Colomb, 419 F.3d 292, 299 (5th Cir. 2005) (quoting Landis

v. N. Am. Co., 299 U.S. 248, 254 (1936)). This inherent authority

extends to granting a stay when the court considers the record and

finds the potential hardship and prejudice to the parties and the

interests of judicial economy weighs in favor of granting the stay.

See Landis, 299 U.S. at 254-255. All claims in the instant matter

involve common questions of fact and law. Allowing plaintiffs to

proceed against Lamorak’s insureds while the claims against

Lamorak are stayed would frustrate the parties’ ability to resolve

the case as a whole and may result in undue prejudice to both

plaintiff and defendant, who would have to bear the increased costs

of litigating the same case twice. Further, proceeding in such a

way would not promote judicial efficiency and runs the risk of

inconsistent jury verdicts. It is also for these reasons that even

if Louisiana Code of Civil Procedure article 1573 was applicable,

the preferential trial setting afforded to Ms. Becnel under

Louisiana Law does not outweigh a stay of all claims in this

matter.

New Orleans, Louisiana this 6th day of July, 2021

___________________________________

SENIOR UNITED STATES DISTRICT JUDGE